january-25Financial industry leaders believe that, despite improvements, serious risks are still a concern for Europe’s biggest banks. Former UK Financial Services Authority head Lord Adair Turner believes it was an error to believe that loans would be “magically unleashed” as Britain’s economy improves.

Speaking at the World Economic Forum in Davos, Lord Turner noted that many of the rules governing European banks may need to be strengthened in order to stop another major crisis from occurring, and that lending to businesses in the UK was still at a “very low” level.

Other World Economic Forum panellists, such as Deutsche Bank co-chief executive Anshu Jain, agreed with his take on European finance. Mr Jain noted that despite a series of improvements, many of Europe’s banks were not “where they should be” and that the United States was “one step ahead again.”

“Inter-bank lending is not back to normal or where it should be” noted the co-chief executive of Deutsche Bank. He was backed up by Lord Turner, who believes that a possible model for the European banking sector could be observed in the changes made to financial services companies in the United States.

Not all of the panellists at the event agreed with Lord Turner’s outlook on Europe’s banking sector. German finance minister Wolfgang Schaeuble noted that Europe is “not the US” and that “fiscal discipline and banking reforms” were the only solution to its financial problems.

Late in 2013, European Union leaders backed a new set of regulations for managing failed Eurozone banks. Under the new rules, a £46 billion fund will be established by the European banking industry over the next decade. The EU hopes that an industry fund will prevent the need for additional taxpayer-funded bailouts of failed banks.

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